Every merchant’s #1 priority is reliably getting paid for the goods and services they sell. In order for merchants to collect payment, they need a gateway to help validate a payment action (for instance, the swipe of a credit card) and facilitate the transfer of money from the customer to the merchant’s bank account.
Gateways, which are essentially digital versions of physical point-of-sale (POS) terminals, facilitate this money transfer neatly and efficiently for merchants that sell one-off goods and services.
That said, gateways on their own are insufficient for businesses that sell goods and services on a recurring basis. That’s because things are a little more complicated in the world of recurring transactions.
What Makes Subscription Billing Different?
Companies that process lots of recurring transactions know the challenges of subscription billing all too well. There’s the need to accurately bill customers for numerous subscriber lifecycle events, such as mid-month signups, upgrades, downgrades, pauses, and cancellations. There’s also the need to deal with payment declines, manage fraud, give subscribers an easy way to manage their subscriptions, gain insights into how the business is performing, support multiple payment methods, and much more.
Asking a gateway to solve for all these scenarios is like trying to eat salad with a spoon: it’s just not the right tool for the job. Gateways on their own simply weren’t designed to handle all the needs of companies with a subscription business model.
Businesses that are serious about handling recurring transactions the right way should pair their gateway with a subscription billing and management platform.
What Can Subscription Billing Platforms Do That Gateways Can’t?
Subscription management platforms help companies gain better insight into their business, offer customers more payment options, deal with fraud, comply with tax regulations, and improve their overall relationship with their subscribers. The possibilities are endless.
Businesses that adopt a subscription billing platform can:
Give their subscribers more ways to pay, including direct debit, and support more currencies — considering a whopping 92% of online customers prefer to buy in their local currency, this is hugely important.
Utilize more than one gateway and intelligently route transactions to the right one. Certain gateways may offer higher acceptance rates, lower processing fees, and other advantages depending on a subscriber’s geographic location.
Overcome the challenges of gateway failure, which occurs more often than you might think (approximately 50% of gateways had more than 10 outage incidents last year). This can make a world of difference for subscription businesses, where it’s not just one transaction at risk, but a recurring set of transactions.
Bring together a number of pieces of their tech stack, including their ERP system, CRM platform, and data warehouse, to enhance revenue reconciliation and increase other efficiencies.
Proactively address involuntary churn by taking action before, during, and after a transaction through Account Updater functionality, intelligent retry logic, and customizable dunning strategies, helping increase monthly revenue by double-digit percentages.
Recurly provides thousands of companies worldwide with a comprehensive subscription billing and management solution that, when paired with one or more gateways, helps them focus on delivering incredible customer experiences. Learn more in our latest guide: